UK Gilt Yields Rise on Inflation Fears, Political Uncertainty

2026-05-11 07:28 By Joana Ferreira 1 min. read

UK 10-year gilt yields climbed back above 4.95% as rising oil prices, driven by escalating tensions between the US and Iran, heightened inflation concerns and reinforced expectations of further Bank of England rate hikes.

Investors also continued to assess the fallout from last week’s UK local elections.

Brent crude surpassed $105 per barrel after President Trump dismissed Iran’s latest peace proposal as “totally unacceptable.” The fate of the Strait of Hormuz remains uncertain, as reports from The Wall Street Journal suggested Iran had offered to dilute some enriched uranium and transfer the remainder to a third country, a claim Iran denied.

Domestically, Prime Minister Keir Starmer is set to deliver a key speech on Monday aiming to reassure Labour MPs of his leadership amid heavy election losses and growing speculation of a potential challenge.

On the macro front, REC/KPMG data showed hiring for permanent positions in the UK falling at the fastest pace in three months in April.



News Stream
UK 10-Year Gilt Yield Moves Higher
The UK 10-year gilt yield rose to around 5.06% as higher oil prices reinforced concerns about inflation and the outlook for monetary policy. The increase in energy costs is particularly significant for the UK, a net oil importer that has struggled to bring inflation sustainably back to target. Consumer price inflation accelerated to a four-month high in July, although recent labour-market data pointed to some cooling in employment conditions. Markets continue to anticipate tighter monetary policy, with traders pricing in one Bank of England rate increase by the end of this year and another quarter-point hike by April next year. Rising gilt yields also reflected broader pressure across global bond markets, following a similar move in US Treasuries as the initial boost from the US Treasury’s expanded buyback programme faded.
2026-08-20
UK 10-Year Gilt Yield Edges Down After Inflation Data
The UK 10-year gilt yield eased to around 5.05% as investors assessed the latest inflation and labour-market data for clues on the Bank of England’s policy outlook. Headline CPI rose to 2.9% year-on-year in July from 2.6% in June, matching market expectations, while core inflation remained unchanged at 2.6%. The figures were broadly in line with forecasts and prompted traders to modestly reduce bets on a rate increase before year-end. Recent labour data also pointed to a cooling jobs market, with unemployment unexpectedly holding at 4.9% and payroll employment declining by 86,000 year-on-year. Regular earnings growth was slightly stronger than anticipated at 3.5%. While the UK economy has shown some resilience, elevated oil prices and fading hopes of a US-Iran agreement continue to pose inflation risks. Markets still price at least one BoE hike this year, although most economists expect rates to remain unchanged.
2026-08-19
UK 10-Year Gilt Yield Rises to Over 3-Week High
The UK 10-year gilt yield rose above 5.0%, reaching its highest level since July 23, as renewed concerns over the Iran conflict pushed oil prices higher and heightened inflation risks. The move formed part of a broader global bond selloff, although the rise in UK yields was limited by signs of a weakening labour market that could reduce pressure on the Bank of England to tighten policy. Unemployment unexpectedly remained at 4.9% in the three months to June, above the 4.8% forecast, while payroll employment fell by 86,000 year-on-year. Regular earnings growth stood at 3.5%, slightly above expectations. The figures reinforce expectations that the BoE may keep rates unchanged for the remainder of the year, after leaving policy steady in July. Investors are now turning their attention to the latest UK inflation report, which is expected to show headline inflation accelerating to a four-month high, while underlying price growth may ease.
2026-08-18